Dear Minister
Summary of Significant Accounting Policies
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1. Summary of Significant Accounting Policies 1.1 bjective of the Indigenous Land Corporation The Indigenous Land Corporation (ILC) is an independent Australian Government statutory authority established to provide economic, environmental, social and cultural benefits for Aboriginal people and Torres Strait Islanders by assisting with acquisition and management of land. The ILC was established on 1 June 1995, and is governed by the Aboriginal and Torres Strait Islander Act 2005 (ATSI Act). The ILC is structured to meet the following outcome: Enhanced socio-economic development, maintenance of cultural identity and protection of the environment by Indigenous Australians through land acquisition and management. 1.2 asis of preparation of the financial statements The financial statements are general purpose financial statements and are required by clause 1(b) of Schedule 1 to the Commonwealth Authorities and Companies Act 1997. The ILC and Consolidated financial statements have been prepared in accordance with: • Finance Minister’s Orders (FMOs) for reporting periods ending on or after 1 July 2010; and • Australian Accounting Standards and Interpretations issued by the Australian Accounting Standards Board (AASB) that apply for the reporting period. The financial statements have been prepared on an accrual basis and are in accordance with historical cost convention, except for certain assets at fair value. Except where stated, no allowance is made for the effect of changing prices on the results or on the financial position of the ILC and the economic entity (“the Corporation”). The financial statements are presented in Australian dollars and values are rounded to the nearest thousand dollar unless otherwise specified. Unless alternative treatment is specifically required by an accounting standard or the FMOs, assets and liabilities are recognised in the ILC and Consolidated Balance Sheet when, and only when, it is probable that future economic benefits will flow to the entity or a future sacrifice of economic benefits will be required and the amounts of the assets and liabilities can be reliably measured. However, assets and liabilities arising under executor contracts are not recognised unless required by an accounting standard. Liabilities and assets that are unrecognised are reported in the Schedule of Commitments or the Schedule of Contingencies. Unless alternative treatment is specifically required by an Accounting Standard, income and expenses are recognised in the ILC and Consolidated Statement of Comprehensive Income when, and only when, the flow, consumption or loss of economic benefit has occurred and can be reliably measured. 1.3 ignificant accounting judgements and estimates No accounting assumptions or estimates have been identified that have a significant risk of causing material adjustment to the carrying amounts of assets and liabilities within the next accounting period. 1.4 ew accounting standards
No accounting standard has been adopted earlier than the application date as stated in the standard. New standards, revised standards, interpretations and amending standards, issued prior to the signing of the statements by the ILC General Manager and Chief Financial Officer, applicable to the current reporting period did not have a financial impact, and are not expected to have a future financial impact on the Corporation.
New standards, revised standards, interpretations and amending amendments to standards, issued prior to the signing of the statements by the ILC General Manager and Chief Financial Officer, which are applicable to future reporting period are not expected to have a financial impact on the Corporation. 1.5 rinciples of consolidation The consolidated financial statements are those of the Corporation, comprising: • ILC (the parent entity) and its subsidiaries: • Land Enterprise Australia Pty Ltd (“LEA”) • Cardabia Pastoral Company Pty Ltd as trustee for Cardabia Pastoral Company Trust (deregistered 20 June 2010) • Mt Clarence Pastoral Company Pty Ltd as trustee for Mt Clarence Pastoral Company Trust (deregistered 23 April 2010) • Mt Clarence Pastoral Company Trust (“Mt Clarence”) (wound up 23 April 2010) • National Indigenous Pastoral Enterprises Pty Ltd (“NIPE”) • National Centre of Indigenous Excellence Ltd (“NCIE”) • Voyages Indigenous Tourism Australia Pty Ltd (“Voyages”) (incorporated 30 September 2010) NCIE was incorporated to manage the National Centre of Indigenous Excellence in Redfern NSW on behalf of the ILC. No income or property of NCIE may be paid or transferred directly to any member of NCIE whether by way of dividend, bonus or otherwise. The ILC is the sole member of NCIE. Voyages was incorporated to own and manage Ayers Rock Resort in Yulara NT on behalf of the ILC. All subsidiaries are 100% owned by the parent entity and are all incorporated in Australia. Subsidiaries are all those entities (including special purpose entities) over which the ILC has the power to govern the financial and operating policies so as to obtain benefits from their activities. These entities have applied accounting policies consistent with those of the ILC. The effects of all transactions and balances between the entities are eliminated in full. The financial statements of the subsidiaries are prepared for the same reporting period as the parent entity. 1.6 evenue The revenues described in this note are revenues relating to the core operating activities of the Corporation. Interest is recognised using the effective interest rate method as set out in AASB 139 Financial Instruments: Recognition and Measurement. 1.6 evenue (cont..) Revenue from the sale of goods is recognised when: • The risks and rewards of ownership have been transferred to the buyer; • The Corporation retains no managerial involvement nor effective control over the goods; • The revenue and transactions costs can be reliably measured; and • It is probable that the economic benefits associated with the transaction will flow to the Corporation. See Note 1.21 in relation to recognition of income from biological assets. Revenue from rendering of services is recognised by reference to the stage of completion of rendering of service at the reporting date. The revenue is recognised when: • The amount of revenue, stage of completion and transaction costs incurred can be reliably measured; and • The probable economic benefits from the transaction will flow to the Corporation. Sundry income is recognised on an earned basis. 1.7 ains Gains from disposal of non-current assets are recognised when control of the asset has passed to the buyer. Contribution of assets at no cost of acquisition or for nominal consideration are recognised as gains at their fair value when the asset qualifies for recognition. 1.8 evenue from Government Funding received or receivable from agencies (appropriated to the agency as a CAC Act body payment item for payment to the Corporation) is recognised as revenue from Government unless they are in the nature of an equity injection or loan. Any amounts received under the Parental Leave Payment Scheme by the Corporation not yet paid to employees are presented as cash and liability (payable). The Corporation did not receive any amount under this scheme for the reporting period. Revenue from Government is disclosed in Note 8A. 1.9 ransactions with the Government as owner Amounts that are designated as equity injections for a year are recognised directly in contributed equity in that year. Net assets received or relinquished to another Australian Government agency or authority under a restructuring of administrative arrangements are adjusted at their book value directly against contributed equity. The FMOs require that distributions to owners be debited to contributed equity unless in the nature of a dividend. Contributions by, or distribution to, owners are disclosed at Note 13. 1.10 mployee benefits Benefits Liabilities for “short-term employee benefits”1 and termination benefits due within twelve months of the end of the reporting period are measured at their nominal amounts. The nominal amount is calculated with regards to the rates expected to be paid on settlement of the liability. All other employee benefits liabilities are measured at the present value of the estimated future cash outflows to be made in respect of services provided by employees up to the reporting date. 1.10 mployee benefits (cont..)
The liability for employee benefits includes provision for annual leave and long service leave. No provision has been made for sick leave as all sick leave is non-vesting and the average sick leave taken in future years by employees of the Corporation is estimated to be less than the annual entitlement for sick leave. The leave liabilities are calculated on the basis of employees’ remuneration at the estimated salary rates that will apply at the time the leave is taken, including the Corporation’s employer superannuation contribution rates to the extent that the leave is likely to be taken during service rather than paid out on termination.
Provision is made for separation and redundancy benefit payments. The Corporation recognises a provision for termination when it has developed a detailed formal plan for the termination and has informed those employees affected that it will carry out the terminations. Superannuation Employees of the ILC are members of the Commonwealth Superannuation Scheme (CSS), the Public Sector Scheme (PSS) or the PSS Accumulation Plan (PSSap). The CSS and PSS are defined benefits schemes for the Australian Government. The PPSap is a defined contribution scheme. The liability for defined benefits is recognised in the financial statements of the Australian Government and is settled by the Australian Government in due course. This liability is reported by the Department of Finance and Deregulation as an administered item. The ILC makes employer contributions to the employee superannuation scheme at rates determined by the actuary to be sufficient to meet the cost to the Australian Government of the superannuation entitlements of the ILC’s employees. The ILC accounts for the contributions as if they were contributions to defined contributions plans. Superannuation contributions on behalf of employees of the ILC’s wholly-owned subsidiaries are made in accordance with their employment contracts, mainly to industry superannuation funds which are defined contribution plans. The liability for superannuation recognised as at 30 June represents outstanding contributions accrued as at the reporting date. 1.11 eases A distinction is made between finance leases and operating leases. Finance leases effectively transfer from the lessor to the lessee substantially all the risks and benefits incidental to ownership of the leased assets. In operating leases (a lease that is not a finance lease), the lessor effectively retains substantially all such risks and benefits. Where an asset is acquired by means of a finance lease, the asset is capitalised at either the fair value of the leased property or, if lower, the present value of minimum lease payments at the inception of the lease, and a liability recognised at the same amount. The discount rate used is the interest rate implicit in the lease. Leased assets are amortised over the period of the lease. Lease payments are allocated between the principal component and interest expense. Operating lease payments are expensed on a basis which is representative of the pattern of benefits derived from the leased assets. Where the ILC has a lease or a grazing licence over a property, the lease is classified as an operating lease. The total consideration paid by the ILC over the term of the lease, being cash payments and/or capital development, is expensed on a straight line basis over the term of the lease. Lease incentives taking the form of “free” leasehold improvements and rent holidays are recognised as liabilities. These liabilities are reduced by allocating lease payments between rental expenses and the reduction of the liability. 1.12 orrowing costs All borrowing costs are expensed as incurred. 1.13 ash and cash equivalents Cash and cash equivalents includes cash on hand, advances made and demand deposits with a bank or financial institution held at call or with an original maturity of three months or less that are readily convertible to known amounts of cash and subject to insignificant risk of change in value. Cash is recognised at its nominal amount. 1.14 rade and other receivables Trade receivables, which generally have 28-day terms, are recognised initially at fair value and subsequently measured at amortised cost using the effective interest rate method, less an allowance for impairment. Collectability of trade receivables is reviewed on an ongoing basis. Individual debts that are known to be uncollectable are written off when identified. An impairment provision is recognised when it is probable that the Corporation will not be able to collect the receivable. 1.15 nvestments and other financial assets Investments and other financial assets are categorised as either held to maturity investments or loans and receivables. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition. Financial assets are recognised and derecognised upon trade date. Held-to-maturity investments Non-derivative financial assets with fixed or determinable payments and fixed maturity dates that the Corporation has the positive intent and ability to hold to maturity are classified as held-to-maturity investments. Investments designated as held-to-maturity investments are fixed-rate term deposits with a term exceeding 3 months and amortising notes placed with major banks. Held-to-maturity investments are recorded at amortised cost using the effective interest rate method less impairment, with revenue recognised on an effective yield basis. Loans and receivables Financial instruments designated as loans and receivables are short-term deposits with major banks, trade and other receivables and repayable grants. Loans and receivables are measured at amortised cost using the effective interest rate method less impairment. Interest is recognised by applying the effective interest rate method. Repayable grants are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are carried at amortised cost using the effective interest rate method. Gains and losses are recognised in the profit and loss when the repayable grant is impaired. Additional disclosures in relation to financial instruments are provided at Note 23. 1.16 mpairment of financial assets Financial assets are assessed for impairment at each balance date. Financial assets held at amortised cost If there is objective evidence that an impairment loss has been incurred for held to maturity investments or loans and receivables, the amount of the impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the asset’s original effective interest rate. The carrying amount is reduced by way of an allowance account. The loss is recognised in the Statement of Comprehensive Income. 1.16 mpairment of financial assets (cont..)
If there is objective evidence that an impairment loss has been incurred, the amount of impairment loss is the difference between the carrying amount of the asset and the present value of the estimated future cash flows discounted at the current market rate for similar assets. 1.17 cquisition of assets Assets are recorded at cost on acquisition, except as stated below. The cost of acquisition includes the fair value of assets transferred in exchange and liabilities undertaken. Financial assets are initially measured at their fair value plus transaction costs where appropriate. Assets acquired at no cost, or for nominal consideration, are initially recognised as assets and income at their fair value at the date of acquisition, unless acquired as a consequence of restructuring of administrative arrangements. In the latter case, assets are initially recognised as contributions by owners at the amounts at which they were recognised in the transferor authority’s accounts immediately prior to the restructuring. 1.18 nterest in joint ventures The ILC’s interest in a joint venture is through the joint ownership of two properties that are classified as Inventory – property held for grant (see Note 10D). This joint venture does not involve the establishment of a corporation, partnership or other entity to a financial structure that is separate from the parties. Each party has control over its share of future economic benefits through its share of the jointly controlled asset. In respect of the controlled asset the ILC recognises its share in the jointly controlled asset, classified according to the nature of the assets in accordance with AASB 131 Interests in Joint Ventures. As at reporting date, there was no income, expenditure, liability, or any contingent asset or liability arising from the joint venture arrangement. 1.19 roperty, plant and equipment
Purchases of property, plant and equipment (not held for grant) are recognised initially at cost in the Balance Sheet, except for purchases costing less than $1,000 (or $2,000 for Voyages), which are expensed in the year of acquisition (other than where they form part of a group of similar items which are significant in total). The initial cost of an asset includes an estimate of the cost of dismantling and removing the item and restoring the site on which it is located. This is particularly relevant to “make good” provisions in property leases taken up by the ILC where there exists an obligation to restore the property to its original condition. These costs are included in the value of the ILC’s leasehold improvements with a corresponding provision for the “make good” recognised. Property, plant and equipment acquired free, or for a nominal amount, is initially recognised at fair value. Revaluation Following initial recognition at cost, property, plant and equipment are carried at fair value less subsequent accumulated depreciation and accumulated impairment losses. Valuations are conducted with sufficient frequency to ensure that the carrying amount of assets do not materially differ at reporting date, from their fair value. Valuations undertaken in each year are as at 30 June. The valuations undertaken during the reporting period were conducted by independent professionals who are experts in the valuation of that class of asset. Buildings and infrastructure on properties that are under construction or significant redevelopment have not been revalued as at 30 June as the cost of the construction and redevelopment would approximate fair value. Buildings and infrastructure on properties that have completed significant construction projects during the reporting period have not been revalued as at 30 June as the cost of the construction represents the fair value of the construction. 1.19 roperty, plant and equipment (cont..) Fair values for each class of assets are determined as shown below: Asset class Fair value measured at: Leasehold improvements Depreciated replacement cost Office equipment, furniture and fittings Market selling price and computer systems Property, plant and equipment on Commercial Properties, Market selling price or depreciated being buildings and infrastructure, plant and equipment, replacement cost furniture and fittings and motor vehicles. Revaluation adjustments are made on a class basis. Any revaluation increment is credited to equity under the heading of asset revaluation reserve except to the extent that it reverses a previous revaluation decrement of the same asset class that was previously recognised in the surplus/deficit. Revaluation decrements for a class of assets are recognised directly in the surplus/deficit except to the extent that they reverse a previous revaluation increment for that class. Any accumulated depreciation as at the revaluation date is eliminated against the gross carrying amount of the asset and the asset is restated to the revaluated amount. Depreciation and Amortisation Depreciable property, plant and equipment are written off to their estimated residual values over their estimated useful lives to the Corporation using both the diminishing value and prime cost methods of depreciation. Leasehold improvements are amortised over the lower of the estimated useful life of the improvements or the unexpired period of the lease. Depreciation rates (useful lives), residual values and methods are reviewed at each reporting date and necessary adjustments are recognised in the current, or current and future reporting periods, as appropriate. Depreciation rates applying to each class of assets are as follows:
The aggregate amount of depreciation allocated for each class of asset during the reporting period is disclosed in Note 10G. 1.19 roperty, plant and equipment (cont..) Impairment All assets were assessed for impairment at 30 June 2011. Where indications of impairment exist, the asset’s recoverable amount is estimated and an impairment adjustment made if the asset’s recoverable amount is less than its carrying amount. The recoverable amount of an asset is the higher of its fair value less costs to sell and its value in use. Value in use is the present value of the future cash flows expected to be derived from the asset. Where the future economic benefits of an asset is not primarily dependent on an asset’s ability to generate future cash flows, and the asset would be replaced if the Corporation was deprived of the asset, its value in use is taken to be the depreciated replacement cost. In the prior year, an indicator of impairment was found for buildings and structures on one property held by the ILC. Accordingly, an impairment loss was recognised in the surplus (deficit). No impairment losses were recognised in the current year. Derecognition An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use of disposal. 1.20 Intangible assets and goodwill The Corporation’s intangibles comprise internally developed and externally acquired software for internal use, and software, brands, leases, licences and contractual relationships acquired through business combinations (refer note 1.30). These assets are carried at cost less accumulated amortisation and accumulated impairment losses. Software All software assets were assessed for impairment as at 30 June 2011, and adjustments made for those determined to be impaired. Capitalised software is amortised on a straight-line basis over its estimated useful life. Useful lives are:
Goodwill After initial recognition, goodwill acquired in a business combination is measured at cost less any accumulated impairment losses. Goodwill is not amortised but is subject to impairment testing on a annual basis or whenever there is an indication of impairment. 1.21 iological assets Biological assets consists of wool, livestock and plantings and fruit. Livestock consists of that held for grant (Inventory) and that held for trading purposes. Livestock held for trading purposes includes cattle, buffalo and sheep. There are a small number of horses on ILC’s properties that are used as working beasts. Wild goats were mustered and sold during the reporting period. Livestock which are considered to be biological assets are accounted for in accordance with Australian Accounting Standard AASB 141 Agriculture and are measured at fair value less estimated point-of-sale costs (net market value). Gains or losses on changes in the net market value of livestock are recognised in the surplus/deficit. Musters or counts are performed on each of the properties at least annually which are used to estimate the size of the herd/flock and breeding and death rates in accordance with standard industry practice. Where the musters/counts do not coincide with the reporting period, the last muster/count numbers are used and natural increase and deaths are estimated to the end of the reporting period. Where musters/counts are expected to coincide with reporting periods but are unable to be completed due to circumstances outside of the control of the Corporation, (eg weather), natural increase is recorded based on muster results completed as at reporting date. Where estimates of natural increase cannot be reliably made, no natural increase since the last muster/count is recorded. Paddock records are maintained on all properties. The net market value is determined by independent valuations undertaken by industry experts based on the value which could be expected to be received from the disposal of livestock in an active and liquid market after deducting costs expected to be incurred in realising the proceeds of such a disposal. The valuation takes into account the general make up of the herd/flock as at reporting date and the use and productivity of the animals to be valued. A provision for deaths is made at each reporting date equivalent to 5% of the value of livestock held at reporting date. Non-living agricultural produce, wool, extracted from livestock is recognised as revenue in the reporting period that the produce is extracted. Gains or losses on changes in the net market value are recognised in the Statement of Comprehensive Income. The wool is then accounted for in accordance with AASB 102 Inventories. Plantings consists of citrus fruit trees and grape vines that are part of two blocks of land purchased by the ILC. The plantings are considered to be biological assets and are accounted for in accordance with AASB 141 Agriculture and are measured at fair value less estimated point-of-sale costs (net market value). Gains or losses on changes in the net market value are recognised in the surplus/deficit. The net market value is determined by independent valuations undertaken by industry experts. The valuation takes into account the general make up of the plantings as at reporting date. The net market value of the plantings is the amount, which could be expected to be received from the disposal of the plantings in an active and liquid market after deducting costs expected to be incurred in realising the proceeds of such a disposal, in the ordinary course of business, rather than the net proceeds from disposal expected from a distress sale. The two blocks, and hence the plantings, were reclassified as held for sale assets during the current reporting period. Non-living agricultural produce, fruit, extracted from plantings are recognised as revenue in the reporting period that the produce is extracted. Gains or losses on changes in the net market value are recognised in the surplus/deficit. The fruit produce of plantings is then accounted for in accordance with AASB 102 Inventories. 1.22 nventory – Property held for grant Property held for grant is land, plant and equipment and livestock held for grant which represents properties purchased for the purpose of grant to appropriate organisations in line with the legislative function and objectives of the ILC. These assets are held for distribution at no consideration in the ordinary course of business of the ILC. Accordingly, these assets are classified as inventory held for distribution in accordance with AASB 102 Inventories. Property held for grant is initially recorded at cost. Property held for grant acquired for free, or for a nominal amount, is recognised initially at current replacement cost at the date of acquisition. Ongoing the assets are valued at cost, adjusted when applicable for any loss of service potential. Any adjustment is expensed to the Statement of Comprehensive Income. Land purchases (including the related plant, equipment and livestock, acquisition and holding costs) are capitalised on purchase. At this time, a provision is raised against the Statement of Comprehensive Income for the full cost of the purchase representing the sacrifice of the future benefits embodied in the assets. On transfer, the assets and provision are offset against one another. Livestock held for grant is purchased incidental to the purchase of land and is not held for the specific purpose of sale. It is valued at cost, adjusted when applicable for any loss of service potential. Loss of service potential of livestock held for grant is identified and measured based on current replacement cost. Where the infrastructure and plant and equipment are used in the production or supply of goods or services on an ongoing and commercial basis the corresponding asset is classified as Property, plant and equipment in accordance with AASB 116 Property, Plant and Equipment. 1.23 nventory – Other Inventories held for sale are valued at the lower of cost and net realisable value. 1.24 eld for sale assets Non-financial assets are classified as held for sale and measured at the lower of their carrying amount and fair value less costs to sell if their carrying amount will be recovered principally through a sales transaction. They are not depreciated or amortised. For an asset to be classified as held for sale, it must be available for immediate sale in its present condition and its sale must be highly probable. 1.25 inancial liabilities Financial liabilities are classified as either financial liabilities at fair value through profit and loss or other financial liabilities. Financial liabilities are recognised and derecognised upon trade date. Financial liabilities at fair value through profit and loss Financial liabilities at fair value through profit and loss are initially measured at fair value, net of transaction costs. Subsequent fair value adjustments are recognised in the surplus/deficit. The net gain or loss recognised in the surplus/deficit incorporates any interest paid on the financial liability. Other financial liabilities Other financial liabilities, including borrowings, are initially measured at fair value, net of any transaction costs. Other financial liabilities are subsequently measured at amortised cost using the effective interest rate method, with interest expense recognised on an effective yield basis. 1.26 upplier and other payables Supplier and other payables are carried at amortised cost. Due to their short-term nature, they are not discounted. Liabilities are recognised to the extent that the goods and services have been received (and irrespective of having been invoiced). The amounts are unsecured and usually paid within 30 days of recognition. 1.27 ontingent liabilities and contingent assets Contingent liabilities and contingent assets are not recognised in the balance sheet but are reported in the relevant schedules and notes. They may arise from uncertainty as to the existence of a liability or asset or represent an asset or liability in respect of which the amount cannot be reliably measured. Contingent assets are disclosed when settlement is probable but not virtually certain and contingent liabilities are disclosed when settlement is greater than remote (Refer Note 15 and 16). 1.28 ash Flow Statement The statement shows the sources of cash and how cash was applied during the financial year. Cash flows, including those relating to the GST component of a receipt and payment, are included in the statement on a gross basis. Cash flows also include those relating to payables and receivables of prior periods or in advance for future periods. 1.29 axation In accordance with Section 193P of the Aboriginal and Torres Strait Islander Act 2005, the ILC is subject to all Commonwealth and State taxation except income tax and stamp duty (where land is divested to an Aboriginal Corporation within 12 months). LEA is considered tax exempt by virtue of Section 50–40 of the Income Tax Assessment Act 1997. NIPE is subject to taxation. However, due to the nature of its income and expenses, no tax is payable and no provision for tax is recognised. Voyages is subject to taxation. NCIE has sought and has been granted exemption from taxation as a result of being recognised as a Public Benevolent Institution. Current tax assets and liabilities for the current period is measured at the amount expected to be recovered from or paid to the taxation authorities based on the current period’s taxable income. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the reporting date. Deferred income tax is provided on all temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred income tax liabilities are recognised for all taxable temporary differences except: • where the deferred income tax liability arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; or • when the taxable temporary differences is associated with investments in subsidiaries and the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future. 1.29 axation (cont..) Deferred income tax assets are recognised for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised, except: • when the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; or • when the deductible temporary differences associated with investments in subsidiaries, deferred tax assets are only recognised to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised. The carrying amount of deferred income tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised. Unrecognised deferred income tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered. Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date. Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred tax assets and liabilities relate to the same taxable entity and the same taxable authority.
Revenues, expenses and assets are recognised net of the amount of GST except: • when the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and • receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the Balance Sheet. Cash flows are included in the Cash Flow Statement on a gross basis and the GST component of cash flows arising from investing and financing activities, which is recoverable from, or payable to, the taxation authority are classified as operating cash flows. Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority. 1.30 usiness Combinations On 23 May 2011, as part of its Land Acquisition function, the ILC acquired the assets, business and the corporate operating platform at Ayers Rock Resort, Yulara, in the Northern Territory for $300 million (plus settlement adjustments of $2 million). In accordance with the terms of the sale agreement, the ILC immediately onsold it to its wholly owned subsidiary Voyages. The acquisition of Ayers Rock Resort, the business and the operating platform, which included the transfer of the majority of the staff, effectively meant that business continued without interruption. The actual consideration will be paid over a period of 5 years, attracting 6.5% interest on the unpaid portion of the consideration. In recognition of the deferred payment arrangements , the ILC has agreed to pay the vendor an uplift payment at the end of year five (minimum payment $17 million) refer note 15. The discounted value of the minimum amount of the uplift payment has been included as purchase consideration. The vendor has also agreed to contribute $25 million over 5 years for capital development of the asset in recognition of the state of the property on sale. This amount has also been included as purchase consideration (refer note 15). To assist in the allocation of the purchase consideration and to provide a fair value valuation of land, property plant and equipment, intangibles and goodwill, the ILC engaged independent valuers and a quantity surveyor. The fair value of identifiable assets and liabilities as of the date of acquisition were:
The consolidated Statement of Comprehensive Income includes sales revenue and net profit for the year ended 30 June 2011 of $10,623,862 and $2,624,070 respectively, as a result of the acquisition. 1.31 omparative figures Where necessary, comparative figures have been adjusted to conform with changes in presentation in these financial statements.
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